Tax refunds slower this year

Saturday

Jan 26, 2013 at 2:00 AM

Congress' protracted battle with the White House over the so-called fiscal cliff has hampered the government's ability to collect and process tax returns, even making some tax forms temporarily unavailable. That means middle- and- moderate-income people anxious to collect a refund with earned-income tax credits might not be able to file returns until the end of January. It also means a delay until around mid-February for filing returns involving depreciation and sale of business assets, said Jason Giordano, a certified public accountant with the firm of Judelson, Giordano and Siegel in the Town of Wallkill.

James Walsh

Congress' protracted battle with the White House over the so-called fiscal cliff has hampered the government's ability to collect and process tax returns, even making some tax forms temporarily unavailable.

That means middle- and- moderate-income people anxious to collect a refund with earned-income tax credits might not be able to file returns until the end of January. It also means a delay until around mid-February for filing returns involving depreciation and sale of business assets, said Jason Giordano, a certified public accountant with the firm of Judelson, Giordano and Siegel in the Town of Wallkill.

The passage of the American Taxpayer Relief Act on Jan. 2 didn't give the IRS enough time to adjust its filing forms.

"The hardship for them," Giordano said of the earned-income tax credit filer, "is that they'll be waiting longer for their refunds."

How much longer? They're not likely to see refunds electronically transferred to their bank accounts for at least seven to 14 business days after filing, Giordano said. State returns take longer.

Goshen accountant Jack Berkowitz warned that taxes will still be due at their usual time.

"I don't believe the IRS will extend the April 15 (filing deadline)," Berkowitz said. "We would have heard that by now. "» You still have to go through the process of crunching numbers."

At the same time, he expects more people to seek extensions for filing documents — backing up their returns.

"Everyone is delayed," Berkowitz said. "There are clients waiting for documents from third parties. If they're late, you'll be late."

Congress approved the earned-income tax credit legislation in the mid-1970s to offset income consumed by Social Security taxes. The credit kicks in when it exceeds the taxes owed.

IRS guidelines apply. Earned income, for example, must be less than $45,060, or $50,270 if filing jointly, with three or more qualifying children. The maximum credit ranges from $475 for filers with no children to $5,891 for filers with three or more children.

The Orange County Rural Development Advisory Corp., a nonprofit provider of housing and financial counseling, has many clients eligible for the tax credits. "In reality, many eligible EIC recipients have their money spent before they receive it," said Faith Piatt, executive director of RDAC.

"It goes to show that while things are getting better, a lot of people aren't at that point where they're able to save," Piatt said. "And people aren't saving their refunds, either."

Some use charge cards for expenses, such as car repairs, that they can't otherwise afford, and depend on the tax refund to pay, she said.

"In prior years, with e-files (electronic tax returns) being accepted earlier, many recipients received their refund as early as Jan. 30," Piatt said.

The IRS has acknowledged the Jan. 2 legislation affected a variety of tax forms, including those used by farmers reporting asset depreciation.

"These forms will require extensive programming and testing of IRS systems, which will delay the IRS' ability to accept and process these forms," the IRS announced Jan. 18.

So the IRS plans to waive penalties for quarterly estimated tax payments due March 1 if they're filed and paid by April 15. The filers must, however, request the waiver by attaching Form 2210-F to their tax return, according to the IRS announcement.